Is Tesla Really a Disruptor? (And Why the Answer Matters) (2024)

FAQs

Is Tesla Really a Disruptor? (And Why the Answer Matters)? ›

Tesla clearly doesn't qualify under the traditional definition of a disruptive innovation. In the model described by Clayton Christensen, a new entrant offers substitute products using technology that is cheaper but initially inferior to products offered by mature incumbents.

As Bartman worked through the questions, it became clear that Tesla is not a disrupter. It's a classic “sustaining innovation”—a product that, according to Christensen's definition, offers incrementally better performance at a higher price.

With its electric vehicles and advanced autonomous driving technology, Tesla has disrupted the automotive industry. It has achieved remarkable success by providing superior products in terms of performance, design, and intelligence.

Classic Christensen theory says Tesla is not disruptive; it's a 'sustaining innovation' because an incumbent could do what Tesla is doing but better, cheaper and quicker and easily overtake the start-up.

All this news bolsters the case for electric vehicles as a disruptive theme. As such, it is nascent and features an accelerating adoption curve despite immediate cost parity and charging infrastructure concerns.

There are two innovations that make Tesla a disruptor in the industry: electric vehicles and automated driving. Electric vehicles aren't new by any means, but Tesla innovated the scene by making it easy and generally accessible to own an electric vehicle.

Tesla's "consideration score" has fallen significantly over the past few years. In February, the EV-maker's score on Caliber's metric of whether consumers trust and like a brand and would consider buying its products plummeted to 31% — less than half its high of 70% in November 2021, Reuters reported.

The safety and quality of Tesla cars and services have been questioned. There have been hundreds of now old reports of sudden unintended acceleration, brake failures, and "whompy wheels" – collapsing wheels due to faulty car suspension.

The lawsuit was filed in 2017 by Tesla worker Marcus Vaughn, who claimed that the factory production floor was a “hotbed of racist behavior.” According to the complaint, co-workers and supervisors routinely used racial slurs, and employee complaints to human resources went largely unanswered.

Tesla Being Tested by Federal Investigations

The DOJ is reportedly investigating whether Tesla committed securities or wire fraud by misleading investors and consumers about its electric vehicles' self-driving capabilities.

What is the disruptive innovation theory of Tesla? ›

Historically, disruptive innovations like those seen in Tesla's EVs and batteries follow a pattern known as the “S-curve”. This growth model suggests that disruptive technologies start off with slow growth as they are refined and perfected.

Most importantly, the production of EV batteries generates far more emissions than the production process for ICE vehicles. Producing the battery alone for a Tesla generates between 5,291 and 35,273 pounds of CO2 emissions, which is up to three times higher than the emissions to manufacture a gas-powered car.

Tesla mostly caters to a single market. The luxury all-electric sports vehicle market, which they founded.

One key disadvantage of electric cars is the battery life. Like all batteries, the capacity decreases over time. Researchers suggest battery capacity decreases by approximately 2.3% every year. Battery longevity is highly dependent on temperature.

The survey of over 300,000 vehicles found electric models suffer 79% more maintenance problems than gas-powered cars. Meanwhile, plug-in hybrids fared even worse — with a concerning 146% more issues reported by drivers.

Several other vehicles are equally unattractive to car thieves, including the Volvo XC90, GMC Acadia, Tesla Model X, Volvo XC40, Chevrolet Trailblazer, Lexus UX 250, and Volvo XC60.

They often go by you when you call them, they somehow create new chokepoints, and often I find myself taking the stairs up to the 10th floor instead. I call this phenomenon the “Tesla syndrome,” and it's a sign of capitalism not working anymore. There's a class war going on, but it's not the one we usually think about.

Bootstrap and niche down: Tesla started as a bootstrapped company, and niched down by targeting the sports car enthusiasts who wanted a high-performance, stylish, and eco-friendly vehicle. By doing so, Tesla was able to differentiate itself from the existing competitors and create a loyal customer base.